DynCorp’s Afghan Settlement With Army Called a ‘Mugging’

April 2 (Bloomberg) -- DynCorp International Inc.’s
agreement with the Army Corps of Engineers over disputed work in
Afghanistan “wasn’t a settlement, it was a mugging,” according
to the U.S. watchdog of wartime spending there.

John Sopko, the special inspector general for Afghanistan
reconstruction, commented in response to findings by the Corps
of Engineers that a $73 million payment to the contractor for
overseeing work on a garrison at Camp Pamir in Kunduz province
“was proper and reasonable although it was not favorable to”
the U.S. government.

Sopko said in an October report that the government freed
DynCorp, which is owned by affiliates of New York-based Cerberus
Capital Management LP, from responsibility while long-standing
deficiencies remained. He asked the Corps of Engineers to
justify the settlement.

Even though “the process followed was inconsistent with
Corps policy, there was sufficient information” to “believe
that the final negotiated modification was the best course of
action,” Colonel John Hurley, deputy commander of the Corps’
Transatlantic Division, said in material attached to a March 25
memo.

Sopko, who heads an independent agency created by Congress
to oversee U.S. spending in Afghanistan, rejected that
conclusion in an e-mailed statement.

“The Corps’ own internal review says they didn’t make
DynCorp pay to fix their shoddy construction, they didn’t
collect the liquidated damages that DynCorp owed them, and they
violated their own settlement policies,” he said.

“But they still think the settlement was ’proper and
reasonable.’” Sopko said. “That wasn’t a settlement, it was a
mugging.”

“We want to make sure that someone is held accountable and
taxpayers are made whole,” Sopko said.

Afghan Army

The garrison construction supervised by Falls Church,
Virginia-based DynCorp was part of the U.S. effort to train and
house the Afghan Army, which is growing to 195,000 personnel.

Army Corps spokesman Michael Beeman said in an e-mailed
response the agency took Sopko’s “concerns regarding the final
modification to the DynCorp contracts very seriously.”

An independent team of technical experts “identified a
number of management and contract administration weaknesses as
well as technical conditions that affected the project and the
final settlement,” Beeman said. The Corps is putting in place
“a number of management controls to continue to improve our
execution of the Afghanistan Reconstruction program,” he said.

DynCorp Response

DynCorp spokeswoman Ashley Burke said in an e-mailed
statement that “it’s important to note that the company
incurred a significant loss of more than $26 million while
grappling with the challenges of this project.”

The Corps’ independent review confirmed that soil
conditions at the site delayed and complicated construction,
Burke said. It also found that the site and buildings were
damaged by the current Afghan occupants, “who have been
responsible for the maintenance and care of the facilities since
mid-2010,” Burke said.

“Clearly we would have preferred a different outcome on
the project but the company did everything possible –- including
providing work at no cost to the government –- to deliver in
challenging and usual circumstances.”